Fertilizer winter storage market performance may struggle to match previous years' levels

Because grain prices are low, farmers' incomes have been greatly affected, just like the cold winter weather, making it impossible to feel cheerful. Likewise, it is not only grain-growing farmers who are deeply troubled; those in the agricultural inputs business are not faring well either. As the saying goes, when agriculture is doing well, the fertilizer market thrives; when grain prices are high, fertilizer sells well. When grain-growing farmers' returns are poor, the fertilizer industry is naturally hit hard as well.

The problem of credit sales of agricultural inputs becomes even more serious

Besides farmers' enthusiasm for growing grain being affected, behind the decline in grain prices, the difficulty of recovering funds after selling agricultural inputs on credit has also worsened. Today in rural areas, credit sales of agricultural inputs are very common. The usual situation is that dealers sell agricultural input products to farmers on credit in the spring, and farmers sell their grain at autumn harvest and then repay the money. But now, in a year of sluggish grain prices, the problem of credit sales of agricultural inputs has become even more serious.

Recently, according to reports, selling on credit carries risk; not selling on credit makes it hard to capture the market and there are no sales. In a normal year, "bad debts" are unavoidable, let alone this year?

Dealers treat winter storage with caution

Many veteran agricultural inputs professionals sigh: the good times of the fertilizer industry have passed. Indeed, in recent years fertilizer output has increased substantially, the risk of off-season storage is not easy to grasp, dealers' enthusiasm for off-season storage was not high to begin with, and now that agricultural products prices are low, dealers are even more cautious in their attitude toward off-season storage.

At present the winter storage market has already started, but apart from dealers in Northeast China who have begun making small payments to manufacturers with whom they have long-term cooperation, most dealers are still waiting to see.

November 7 and 8 were the two days on which the phosphate and compound fertilizer conference, closely watched by agricultural inputs professionals, was held. According to past convention, the holding of the phosphate and compound fertilizer conference is a signal that the fertilizer market is about to warm up. Because after this, as manufacturers' winter storage policies gradually become clear, the market will enter a winter storage fertilizer period of about 3 months, when manufacturers collect payment, downstream dealers build inventories, and the market is in full swing. But based on current industry feedback, the 2015 winter storage market performance may struggle to reach previous years' levels.

"I will still stock up for winter storage this year, but I definitely won't stock much, and I will wait until manufacturers give a clear winter storage quote before making a decision." An agricultural inputs dealer said he would report to manufacturers farmers' ability to bear prices, because this year's agricultural product prices are not ideal, farmers' confidence in growing grain is weakening, and investment in agricultural inputs is estimated to decrease a great deal.